When businesses decide to submit a merchant account application, there are many other documents that must be included in the process. For most merchants, a business license is one that may or may not play a pivotal role in whether their merchant account application is approved or denied.
What many new business owners fail to understand is that a merchant account is essentially a line of credit issued to them by a bank. Therefore, a business license provides a way to show legitimacy on the part of the business owner. However, while a business license is preferred by most credit card processing companies that issue merchant accounts, it is not an absolute requirement.
When combined with a business license, financial statements can be a great way to show the legitimacy and strength of a business. However, if a business is just starting out, financial statements are not required since there is no data to report. This is where a business license can prove invaluable, since it shows a seriousness and commitment to the venture.
Although a business license may or may not be required by a credit card processing company prior to issuing a merchant account, a voided check with the name of the business on it is required. This is necessary due to the company needing to know which bank the funds will be deposited into after processing, allowing the merchant account company the chance to verify all pertinent financial information prior to authorizing the account be established.
When seeking a merchant account, a business license can be important if the business being started is a partnership. Whether it is only one partner or several, a business license will list their names as well as other standard information. This will allow the company issuing the merchant account to not only verify the applicant’s information, but that of any partners as well. Since the merchant account is considered a line of credit to the merchant, the financial stability of everyone involved in the business is usually examined very closely before the account is established.
When starting a business, establishing a solid reputation from the beginning is a smart way to ensure future success. Though not required by all merchant account companies, having a business license to submit with the merchant account application can make the difference when it comes to being approved or denied.